Policies can be individually tailored to reflect a company’s confidence in a celebrity. For example, for sponsorship contracts ranging from £1m to £50m, policies can be designed to reimburse the full amount to the sponsoring company in the event of a misdemeanour by the celebrity, or pay out on a sliding scale, depending on the nature of the incident.
Premiums vary, but brokers say they tend to start at 0.25 per cent of the sum insured, or just under 1 per cent, on average, for more bespoke arrangements.
Cover can also be arranged for different types of risk. One of the main types is loss of profit, if customers stop buying certain products in the wake of a celebrity’s disgrace.
But, as with all insurance, it pays to read the small print and understand the factors that determine the success of a claim. “If someone has a squeaky clean image, the threshold for disgrace is lower than it would be for a hellraiser,” Mr Rackliffe explains.